Pound Plummets On BoE Carney’s Comments

In a speech on the economic and financial implications of the U.K’s vote to leave the EU, BoE’s Governor Mark Carney said he favors a rate cut over the summer, indicating a preference for August over July while leaving the door open to an earlier move.

The governor stressed that the BoE had other options, likely a reference to more QE, although he once again sounded cool on taking interest rates into negative territory.

Mr. Carney noted that members of the FPC could take any steps needed to support the financial system at its meeting Tuesday, and announced that the BoE will continue the longer-term liquidity auctions it launched ahead of the vote until September.

Further out, he said the U.K. does have the capacity to successfully adapt to a future outside the EU, but stressed that it was the responsibility of political leaders to shape that future.

The pound has fallen -150 pips since the beginning of his speech.

The yield on 10-year U.K. government bonds falls to a new low, dropping around -0.02% to +0.918%.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell